Need to know: staff ratios

In an earlier column I spoke about the ratio of HR people to employees in your own organisation, and how understanding these ratios, what affects them, and how they change, will help you to determine a lot about your business.

It will help you understand how efficiently you are performing, and this in turn will help you to establish whether there is more benefit you can offer and deliver to your client base.

Knowing these ratios in your three major competitors, and applying what you already understand about the strategic importance of ratios, will allow you to compare how well you are performing against the competition, and perhaps give you some ideas about how you can do things better or differently.

So that you can understand how to interpret what the ratios can tell you, it’s important to understand how similar your employee practices are to those of your competitors – and whether HR has the same sort of role in those organisations. They may be your competitors, but are they working to the same business model? If so, these ratios are relevant for comparison, but if not, then while it’s still useful to understand, a direct comparison might not be relevant.

This information is usually easy to discover, but what is harder is finding out why the ratios are the way they are. By making it your business to understand your competitors and which comparisons are relevant, you will be far more able to engage with your internal clients on a level they’re interested in.

This understanding will help you to talk more knowledgeably about the HR function of your competitors. If, for example, a business manager came to you and said: “I’ve just interviewed a person from X competitor, and they have X bonus scheme, why don’t we?”, you will be able to knowledgably discuss the differences between the two organisations and how they are structured.

If the HR practices of your competitors are different, try to ask why – is there something you can learn from it? And you can do the same with their business model. Benchmark your organisation against them, look at what they do in relation to your processes and, above all, challenge yourself to discover whether you can learn anything from them.

What is the ratio of HR people to employees in the three major competitors?